Workers look to future - will it work?

December 18, 1991|By Will Englund | Will Englund,Moscow Bureau of The Sun

MOSCOW -- When the new Commonwealth of Independent States gets down to business in January, it won't get a break from people like Raisa Nakonechnaya.

She's skeptical, frustrated and typical of millions here.

The woeful economy poses the biggest threat to the new commonwealth. The economic crisis and the government's plans for coping with it have people like Mrs. Nakonechnaya virtually up in arms.

She works in a shoe factory in Rostov-on-Don. She's a wage earner, not a capitalist. She sees Russia switching over from being a country with scarce, shoddy consumer goods to one, after the proposed reforms, with scarce, shoddy -- and expensive -- consumer goods.

"What's most dangerous is that production is falling everywhere," she said during a brief, generally fruitless shopping expedition to Moscow. "Prices will be freed, but we won't have anything to buy."

Mrs. Nakonechnaya was looking for New Year's gifts for her two children, but the quality of items in the giant GUM department store on Red Square had left her cold.

"What do I expect in January? I don't expect anything good," she said. "I try to be an optimist, but it's not an easy thing."

Since Dec. 8, the country's economic problems have been somewhat obscured by the military and ethnic issues spawned by creation of the commonwealth, but those are becoming less urgent as the political surge toward the commonwealth continues.

Russia and at least some of the other republics plan to "liberalize" prices Jan. 2, which means letting them find their own level. The idea is that a market economy has to have market prices, and that the move will spur production.

Yegor Gaidar, Mr. Yeltsin's chief economic adviser, expects a burst of inflation, followed by a slight lowering of prices in February, with a modest economic recovery by the end of 1992.

His critics, among both democratic reformers and old-fashioned communists, expect disaster instead.

Grigory Yavlinsky, who was a key adviser to Mr. Gorbachev, argues that freeing prices before the state monopoly on production has been broken is "extremely dangerous."

"It's a big leap -- a leap into the abyss," said Tatyana Koryagina, an economist who has turned bitterly against Mr. Yeltsin. "Liberalization of prices will lead to a disaster. I can't believe the economists around Yeltsin don't understand that."

She predicted that the fledgling commonwealth would be beset by breakaway ethnic groups, high prices, the bankruptcy of manufacturing enterprises, large-scale unemployment, a lack of consumer goods even at high prices, and growth of organized crime.

The government is working toward erecting a buffer through pay raises and perhaps the rationing of some essentials at continued low prices.

But at the same time, it is slapping a 28 percent value-added tax onto consumers' shopping bills. And it's not as though the average wage-earner here does well even under controlled prices.

Boris Lagutenko, an economist, has calculated that when prices are compared to earnings, non-food commodities in Russia already cost 20 to 50 times more than they do in Western industrialized nations. Food is about 15 to 30 times as expensive as in the West, based on the same comparison. (Housing is far cheaper here, and medical care, such as it is, is free.)

Prices are expected to rise three- to five-fold in January.

The unions say they are not prepared to stand idly by.

The Moscow Trade Union Federation has called on its 5.7 million members to conduct a two-hour warning strike in Moscow Dec. 25 unless the city government adopts measures "to protect working people," Mikhail D. Nagaitsev, the federation's vice president, said this week.

The unions are struggling to reshape themselves as credible independent organizations -- after being virtual arms of the Communist Party -- and they say they support creation of a market economy. But they want wages indexed to prices. Wages are still set by the government because the government still owns almost all the factories.

The government in this republic "is changing so swiftly that it's difficult to say anything about our relationship. But I can't call it warm," Mr. Nagaitsev said. "If the government is reasonable, this should help people to live through this difficult period. If not, then some other government will come."

Mr. Nagaitsev said he did not expect strikes to break out right away. "The patience of the Russian people knows no bounds, for one thing," he said. "And in our climate, winter is not the best season for strikes."

There are plenty of people around interested in making life difficult for the government.

Outspoken radical politicians such as Vladimir HD, who advocates an iron hand and Russian dominance in a restored Soviet Union, worry some reformers and are dismissed by others.

"I am very much afraid of a threat from the right," said Alexander Yakovlev, a Gorbachev adviser and founder of the Democratic Reform Movement. "We tend to regard these people as clowns, but clownery was what fascism began as."

Quieter hard-liners like Viktor Alksnis, leader of the Soyuz, or Union, faction in the Soviet Parliament, could be more effective.

In a candid comment to the newspaper Moskovsky Komsomolets, he said, "Ours is a unique country, where everything is decided in street rallies. It would hardly be possible [for democratic reformers] to hold a rally in support of deregulated prices, but it's fairly easy for us to hold one against them."